The long road to recovery for Puerto Rico

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When Storm Maria hit the headlines, the newscasters focused on the damage done to the states it had affected in the USA. People watched the destruction in horror, shocked by the sight of homes and lives not dissimilar to their own be swept away by a storm of biblical proportions. However, for Puerto Rico the damage was even more devastating. Storm Maria was categorised as a ‘catastrophic event’, a higher category of natural event than a disaster, characterised by the fact it has wiped out large swaths of infrastructure over a large area of land.


Puerto Rico was already struggling with financial difficulties before the storm, having defaulted on its debt to America in May which lead to congress putting in place a debt recovery plan. The country’s financial problems were further exacerbated when the Puerto Rico Electric Power Authority (PREPA) went bankrupt in July following problems with maintenance, a shrinking workforce, and high management turnover. The company failed to prioritise maintaining the power grid and is currently $8billion in debt.  The infrastructure was already old and poorly maintained, meaning it was vulnerable when the storm hit the country, resulting in 80% of the distribution system being destroyed. Hospitals and other emergency services have been forced to use generators powered by diesel in order to continue to operate, although the relief effort from the US has been unable to provide large quantities of fuel, depriving many back-up generators.

Government Development Bank for Puerto Rico

PREPA’s struggle to retain talented staff is also a problem facing Puerto Rico as a whole as the island faces an exodus of its inhabitants, losing 8% of its populace between 2010 and 2016. This is in part due to the problems with the power, and also the government’s inability to provide basic services to the island’s inhabitants.

Relief efforts have been strained. Puerto Rico is a small commonwealth of America but has not had much support from congress due to the lack of representation it has in the White House, meaning relief efforts and news focus has been largely on the US states also hit by the storm. Furthermore, the island’s debt has meant that it has struggled to borrow money to help repair the island in the aftermath of the hurricane.

Maria has also caused devastation to the island’s agriculture sector meaning that thousands of farmers are facing ruin with the prospect of no government support. Farmers are only paid $3.25 per tree lost by insurance companies, and with the initial investment at $6-$$7 per tree they will lose money. This insurance payout also does not cover the money farmers will lose whilst they are regrouping and replanting their plantations.

However, commentators have said that whilst the problems that Puerto Rico faces in the near term are likely to continue to have a destructive effect on the country and the economy, the influx of funds and aid needed to rebuild a country after a natural disaster can often help to kick start a country’s economy again. It could work as a pause and reset button on the country’s economy.

Puerto Rico had been working on a debt recovery plan with America’s federal authorities which was helping to slowly reduce their debt, and put a recovery package in place. However, how much does America need to support Puerto Rico? It is a small country and America has little vested interest in helping to bail it out, although the terms of the commonwealth mean that they have to continue to support the state. However, Donald Trump’s recent maverick decisions and hostility towards the southern American territories lead some people to speculate that he may look at reviewing the terms of Puerto Rico’s bail out.  

Joe Raedle/Getty Images/Vox

Puerto Rico has very few powerful friends able to support it, other than the USA, and faces complete collapse should it not continue to be supported by the American government. Puerto Rico is mainly an agricultural state known for its coffee, bananas, and citrus plantations and has few other natural resources which would make it an attractive investment.

It will be a long road to recovery for the island, and it will take a careful and planned investment approach from the government in order to rectify the mistakes of previous governments.

India Daniel

Image: [Gizmodo]